The industrial sector is extremely diverse and involves a wide range of activities
including the extraction of natural resources, conversion into raw materials,
and manufacture of finished products. Due to the wide variety in activities,
energy demand and GHG emissions vary widely. Hence, the aggregate energy use
and emissions depend on the structure (or specific set of activities) of industry,
and the energy and carbon intensity of each of the activities. The structure
of industry may depend on the phase of the economy, as well as many other factors
like resource availability and historical factors. Industrial production and
GHG emissions are still dominated by industrialised countries, but the role
of developing countries in world industrial production, especially Southeast
Asia, is increasing. Cost-effective potentials and opportunities for GHG emission
abatement exist in all regions and industrial sectors. A wide variety of practices
and technologies to reduce GHG emissions are available (see Table 9.2),
often with high paybacks.

In industry, energy efficiency is often the result of investments in modern
equipment, stressing the attention to sound and environmentally benign investment
policies. Investments in technology (including hardware and software) in the
industrial sector are dominated by the private sector. Recent trends in globalisation
of industry seem to affect the international transfer of investments and technology.
Foreign direct investment (FDI) is rapidly increasing, although concentrated
on a small number of rapidly industrialising countries. These countries may
have an impact on regional industrial development patterns, as seen in Asia.
Private investment in other developing regions is still limited, although increasing.
FDI is dominated by transnational companies, while SMEs in industrialised, developing
countries and CEITs have less access to (international) financial markets and
technologies. Although difficult to measure, domestic investments in developing
countries are still larger than FDI. Official development assistance, although
earmarked for low to medium income countries, is also concentrated on a few
countries. Public funding (in industrialised, developing countries and CEITs)
for technology development and transfer, although still important, is decreasing.
Funding for science and technology development is important to support industrial
development, especially in developing countries. Public funding in the industrial
sector, although small in comparison to private funding, remains important but
its future role may be changing. Regular evaluation of the goals of public funding
is needed for industrial development with respect to the role of cleaner technologies
and with respect to the role of private funds.

Barriers limit the uptake of more efficient technologies. These barriers may
include the (un)willingness to invest in (new) technologies, the level of information
and transaction costs, the lack of effective financing (e.g. lack of sufficient
funds, high interest), the lack of skilled personnel and a variety of other
barriers, e.g. the "invisibility" of energy and CO2 emission savings
and the lack of inclusion of external costs. Developing countries and CEITs
suffer from all of these factors that inhibit market acceptance of technologies
plus a multitude of other market problems. Consumers often have no knowledge
of energy efficiency (technologies) or cannot afford increases in equipment
costs, due to a limited ability to pay increased initial costs, limited foreign
currency and high inflation rates. A well developed banking system and existence
of appropriate financing mechanisms are essential for the uptake of efficient
and cleaner technologies in industry.

Traditionally, technology transfer is seen as a private transaction between
two enterprises. However, innovation and technology transfer is an interactive
and iterative process, involving many different parties. An effective process
for technology transfer will require interactivity between various users, producers
and adaptors of technology. The variety of stakeholders makes it necessary to
have a clear policy framework as part of an industrial policy for technology
transfer and cooperation, both for a technology donor and recipient or user.
Such a framework may include environmental, energy, (international) trade, taxation
and patent legislation, as well as a variety of well-aimed incentives. The framework
may help to give the right signals to all parties, as well as help to develop
innovative concepts for technology assessment, financing, procurement, adaptation,
repetition and development. Policymakers are responsible for developing such
a comprehensive framework. The interactive and dynamic character of technology
transfer stresses the need for innovative and flexible approaches, through (long-term)
partnerships between various stakeholders, including public-private partnerships.

The case studies and the literature demonstrate clearly that there is a strong
need to develop the capacity to assess and select technologies. Stakeholders
(policymakers, private investors, financing institutions) in developing countries
and CEITs have even more difficult access to technology information, stressing
the need for a clearinghouse for information on climate abatement technology.
Various innovative policy concepts, including networking and joint research
and information organisations, were found to be successful. To increase the
likelihood of success, long term support for capacity building is essential,
stressing the need for public support for capacity building and cooperation
of technology suppliers and users.

Adaptation of technology to local conditions is essential, but practices vary
widely. Countries that spend on average more on adaptation seem to be more successful
in technology transfer. As countries industrialise the technological capabilities
increase rapidly, accelerating the speed of technology diffusion and development.
This demonstrates that successful technology transfer includes transfer of technological
capabilities, which may be beneficial to both the supplier and user. Technology
users, suppliers as well as financial institutions and governments could give
attention to adaptation as an essential and integral part of technology procurement.

The introduction and diffusion of clean or low-GHG technologies in the industrial
sector needs a sound environmental and economic policy, stressing the need for
long term goals and commitment by policymakers. This also means that technology
transfer needs to be incorporated in R&D strategies, as many (public) environmental
sound technologies "remain on the shelves" and are not brought into
the market as rapidly as may be expected. Several countries and equipment suppliers
envisage that environmentally sound product development can enhance the future
competitive position of domestic suppliers, making technology transfer (through
strengthening local capacity and demonstration of technology) a way to open
new export markets. Subsequently, policies to support the development of new
technologies and markets could be used in these countries as part of economic
and trade policies.